Mortgage Loan Defaults Fall, While Bank-Card Defaults Rise

Data through April 2010, released this week by Standard & Poor's and Experian for the S&P/Experian Consumer Credit Default Indices – a measure of changes in consumer credit defaults – show that the monthly default rates declined for first and second mortgages and auto loans, but climbed for the third month in a row for bank-card loans.

Defaulting balances of bank-card loans were 9.1% in April – up from 8.9% in March and 7.7% from a year earlier. First- and second-mortgage default rates were 3.7% and 2.5%, respectively – both down from March. Auto-loan defaults were 1.9% – down from 2.4% in March.

‘Consumer defaults continue to moderate in the key big-ticket items of first and second mortgages and auto loans,’ says David Blitzer, managing director and chairman of the Index Committee at S&P Indices. ‘In these areas, defaults bottomed out around the same time as the stock market in the first half of 2009. Bank cards, on the other hand, continue to worsen and are at levels not seen in the history of these indices.’

Consumer credit defaults vary across major cities and regions of the U.S. Among the five major metropolitan statistical areas reported each month in this release, Chicago showed the smallest decrease – 5.8% – in the past year. The sharpest decline was in Miami, where defaults declined 40.5% in the last 12 months and 7.9% in the past month.

‘Regional variations in default rates are typical,’ Blitzer comments. ‘The sharp declines in Los Angeles and Miami reflect a somewhat more stable, though still weak, housing market, as well as some overall economic improvements seen in recent months.’

SOURCE: Standard & Poor's


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